18 Mar Insider View: February 2016
…..the focus on lower prices and range reduction has dangers
In January we pondered the future of the bricks and mortar supermarket in light of the growing number of consumers opting to shop at a click of a button. But, this is only one of the challenges facing a grocery trade being heavily disrupted by the success of the Discounters. For retailers there is the direct challenge of pricing and reshaping the business for a direct response through improved competitiveness, but there is also the impact of reshaping their future strategies, including range reductions and new uses for larger stores. Many are responding by reducing the space allocated to food, cutting out options within categories, innovating less and taking fewer risks.
This has implications not only for own label food suppliers, but also for brands, particularly second brands, or new generation suppliers trying to break into a market, or establish a new category. The trade is not as receptive to innovation as a decade ago, nor is the financial marketplace geared to risk, unless the product is proven. Add to this the reduction in shelf space opportunities for brands as a result of the success of limited range discounters taking increased market share and the opportunities for innovation and business development, even by the biggest players, are currently being badly squeezed. Unsurprisingly the numbers of new products we pick up through our Fast Foodfax service has more than halved since 2008, with many falling into the category of ‘asset utilisation’ demanding only limited additional investment in existing facilities.
But this has dangers; wheels turn, attitudes change. The trade must look ahead at the same time as responding to structural change. We are currently in the last stages of consumer testing for the 2016 Grocer Own Label Food and Drink Awards. One of the palpable trends we are picking up is a touch of boredom with more of the same, a slowing growing feeling that consumers are looking for something a bit different again beyond low prices. It will be interesting to see how the Discounters respond to this challenge as they become established players in the UK market.
Cambridge MR offers a wide range of research services to support the process of ideas and innovation. Contact Steve Lawrence on 01223 492069 to find out more.
- IamSouper brings novelty to the soup category with a carton of Pulled Pork & Jalapeno high protein soup; even if the pack was not microwaveable and failed to match the level of new thinking. (Showcase Product of the month Review 160201)
- Marks and Spencer is bang on trend, with a tempting Baby Hass Avocado, (Review 160230) and a meat free addition to its longstanding Gastropub brand: Mushroom & Potato Pie (Review 160204)
- Less successful was Sainsbury’s My Goodness Smoky Tomato & Butternut Squash Quinoa: “too oily” for a supposedly healthy option (Review: 160227)
- Danish import Pastella from Orkla added a healthy twist with “hidden veg” in the dough making it “great for kids” (Review 160203)
- Herbal teas and infusions continue to gain new friends, with Taylors Rose Lemonade Infusion and Marks & Spencer’s Moroccan Mint Infusions performing well above the category average. (Reviews 160235 and 160212).
- Taste rather than Health was the key driver for familiar confectionery brands, with Cadbury’s and Thornton’s proving hard to resist. Cadbury’s Boost Bites from Mondelez achieved a near perfect score (Review 160209), whilst Thornton’s Fabulous Fudge Pots from Ubley (Review 160208) bought something new to the category.